In the Chinese insurance market, it is common practice for a company to try to strengthen its supervision capabilities. In the past, special emphasis has been placed on supervision within departments – however, this is often inefficient. Therefore, financial regulatory institutions are beginning to focus on preventing risk by promoting internal supervisory mechanisms and the principle of compliance management.
Since Ping An Insurance Group initiated the establishment of the “Law & Compliance Department” in 2004 and theChina Insurance Regulatory Commission (CIRC) issued the Guidelines of Standardizing Governance Structure of Insurance Companies in January 2006 which state that insurance companies are required to establish a mechanism of compliance management to strengthen the inspection and evaluation of compliance, other domestic insurance companies have followed suit. In 2007, CIRC issued the formal Guidelines for the Compliance Management of Insurance Companies (hereafter Compliance Guidelines) which provide direct policy guidelines for the establishment of departments of compliance.